Despite relatively soft growth this year, automotive infotainment is set for continued expansion well into the future—fueled by major technology improvements that not only increase the functionality of cars but also enhance the overall driving experience, according to an IHS Automotive market tracker report from information and analytics provider IHS.
Total semiconductor revenue in 2013 derived from automotive infotainment will reach $6.67 billion, up 3 percent from $6.48 billion. Growth this year will be slower than last year’s approximately 4 percent increase, but solid expansion returns next year and beyond, with revenue growth of 3 to 7 percent set to occur each year during the next five years. By 2018, automotive infotainment semiconductor revenue worldwide will amount to $8.54 billion.
The muted growth this year comes in the wake of decreased revenue in the aftermarket sector because of more complete features and system offers from OEMs, as well as a continuing decline in the personal navigation device (PND) segment of the industry. The drop in revenue for both areas will effectively eat into gains to be made by original equipment manufacturers, up a projected 6 percent from 2012 to $4.5 billion this year.
Still, the automotive infotainment market overall remains immune to a downturn, unlike other markets that have been negatively affected by global economic uncertainties. The importance of automotive infotainment continues to increase as consumers clamor for built-in connectivity and telematics in cars, which now have become a major selling point of new vehicles. Used either alone or with mobile devices like smartphones and tablets, the infotainment systems in cars then allow occupants to access information, safety features and entertainment options at will, paving the way for a more seamless interaction with the outside world.
In the long run, however, technology changes in cars will not just be associated with new features and hardware integration into the vehicle, but will also be influenced by new hardware strategies.
For instance, automotive infotainment systems are quickly developing toward a PC-like architectural approach in which more functionality is dependent on a powerful main central unit, IHS Automotive believes. This means that software will acquire greater importance as a differentiator among brands seeking to make their infotainment products and features stand out. Applications previously implemented via hardware will be reconfigured instead into simpler programs reliant on a heavily centralized unit marked by strong processing power and memory capabilities.
On a semiconductor level, growth will be fostered not just by the implementation of more infotainment features into a vehicle, but also by broader technology diffusion among various vehicle segments—trickling from high-end luxury rides all the way down to entry-level pieces. Government regulations and mandates, including those relating to electronic stability control or tire-pressure monitoring, will also help boost semiconductor growth.
Healthy growth to occur in various infotainment segments
Within the automotive infotainment market, PNDs will be the only segment to decline in the coming years. Shipments of the once-popular devices will fall from 33.6 million units last year to 24.0 million by 2018. Meanwhile, the combined market this year for PND-related analog and logic application-specific standard product (ASSP) integrated circuits will be down 18 percent on the year to less than $330 million.
In contrast to PNDs, growth is forecast to take place in various other automotive infotainment segments, including in-dash navigation systems, connectivity in head units, telematics, and both satellite and terrestrial digital radio.
In-dash navigation systems, for instance, will enjoy increased penetration worldwide in vehicle head units, deepening from 19 percent last year to more than 32 percent in 2018. Total in-dash silicon revenues in 2013 will reach $290 million, up from $274 million in 2012.
For connectivity systems in head units—a major trend in infotainment—Bluetooth and USB remain the de facto standard for wired and wireless connectivity given a 35 percent attach rate for each in 2012. Increased momentum will likewise be found in other technologies aiming to cover high-definition applications, such as High-Definition Multimedia Interface (HDMI) and Mobile High-Definition Link (MHL).
In telematics, General Motors’ OnStar and other similar systems continue to have the most mature and widespread market presence. OnStar-type embedded systems hauled in revenue of $480 million last year, with takings by 2018 expected to reach $1.8 billion. Telematics will grow quickly in Europe in the next couple of years as regulations become effective, making features like eCall mandatory in vehicles for summoning help during emergencies.
Automotive OEMs will also lend increasing support to satellite and terrestrial digital radio systems, such as HD Radio in North America and Digital Audio Broadcasting in Europe. In particular, automotive silicon revenue from terrestrial digital radio formats will rise sharply within a span of six years, climbing from $55 million in 2012 to more than $140 million by 2018.
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